A planned increase in business taxes in the upcoming UK budget could prompt a significant number of investors to pause or reduce spending in the country, according to a recent survey of senior financial executives. The findings highlight concerns over the potential economic impact of tax rises proposed by Chancellor John Healey ahead of his first budget, scheduled for October 28.
The survey, conducted in July by YouGov for public affairs firm Teneo, gathered responses from 100 senior leaders responsible for allocating at least £5 million annually within their organisations. Collectively, these executives oversee assets exceeding £30 trillion. Thirty-two percent said a substantial tax increase on companies or investors would lead them to consider halting or scaling back investments in the UK over the next year.
More than half of respondents (58 percent) indicated they perceive the UK as less appealing for investment decisions than it was five years ago, while 28 percent viewed the country as more attractive. A significant majority, 78 percent, expressed the view that the government has not provided sufficient incentives or reasons to commit capital domestically.
Iain Dey, senior managing director at Teneo, underscored the importance of investment to the UK’s economic growth, noting that capital inflows support new businesses, infrastructure development, technology advances, and job creation. He warned that despite remaining broadly attractive, the UK risks losing ground to other markets if tax burdens increase sharply.
The proposed budget is expected to include higher taxes on banks, measures aimed at supporting lower-income households with energy costs, and funding to address homelessness. In addition, Healey plans to implement a tax crackdown on large online marketplaces such as Amazon, eBay, and Temu, requiring them to collect value-added tax owed by third-party sellers operating on their platforms. This initiative is anticipated to generate approximately £1 billion in revenue, largely by targeting non-UK sellers exploiting existing enforcement gaps.
Investor sentiment on the UK’s relationship with the European Union also emerged as a prominent theme. The survey found that 92 percent of respondents favor some form of closer ties with the EU. Almost half (47 percent) support full re-entry into the bloc, while an additional 45 percent advocate for enhanced alignment short of membership, such as participation in the customs union or single market. In contrast, a parallel survey of 100 Members of Parliament revealed only 27 percent believed investors desired EU membership, suggesting a disconnect between political perceptions and business preferences.
Baroness Mattinson, a senior adviser at Teneo and former aide to Labour leader Sir Keir Starmer, highlighted this divergence, emphasizing that MPs may underestimate both the appetite for rejoining the EU and the critical role political stability plays in investment decisions.
Reflecting on these dynamics, the Institute for Public Policy Research, a left-leaning think tank, has called for the UK government to consider rejoining the EU as a medium-term goal, citing concerns about the country’s scale and ability to safeguard prosperity, security, and democratic values independently.
The government responded to the survey findings by acknowledging ongoing cost pressures faced by businesses but emphasized that the UK economy has shown resilience amid global uncertainties. It pointed to the nation’s joint second-fastest economic growth among G7 countries in 2024, alongside a recent upgrade to the UK’s growth forecast for 2026 by the International Monetary Fund.